Business Finance Dish Network Anaylsis Essay

Liquidity ratios measure the capability of a business to cover expenses and meet its current and long-term responsibility. These ratios are imperative in order to keep the business alive. Lending institutions are typically unwilling to loan money to a business that finds itself in a cash flow jam, because that is often a sign of poor management. The liquidity is measured with 3 different ratios; current ratio, turnover – of – cash ratio and debt- to equity ratio.

Liquidity is important for any firm as it is an assessment of the ability to pay its' liabilities in the short term. There are two main liquidity ratios: the current and the quick ratio. The current ratios divides the current assets by the current liabilities to assess how many times the current assets can pay the current liabilities (Elliott and Elliott, 2011). Traditional ratios are usually in the region of 1.5, but this may vary depending on the industry and nature of the business (Elliott and Elliott, 2011). The current ratio is shown in table 1.

Current Ratio: Current ratio measures the capability of the company in paying current liability. Higher the current ratio, better the liquidity position of the company. Generally, a current

Disclaimer: The following notes are based on a fictitious company and the numbers have no bearing on any real data.

Liquidity ratios measures a company`s ability to provide enough cash to cover its short-term obligations. The most common liquidity ratios include; the current ratio and the quick ratio.

Dish Network has a focused and clear business strategy, which articulates their goal and provides the way to achieve it. Dish Network describes their strategy as “to be the best provider of video services in the United States by providing products with the best technology, outstanding customer service, and great value” in their annual report (Dish Network, 2015). Dish Network further explains the reason for their strategy by emphasizing the unsatisfied demand of high quality and reasonably priced products and services from television services subscribers. Their strategy can be well understood since it focuses on consumers’ needs and is closely related to the success of their business. As a result, being clear about what the strategy is and consistently communicating it to consumers, employees, and shareholders enable Dish Network devise and maintain an excellent strategy, which is the key to their business achievements (Nohria, Joyce, & Roberson, 2003).

Liquidity ratio lets us know whether the company is able to pay their short-term and long-term obligations. It measures how well the company can raise cash or convert assets into cash. Companies like to use this ratio to compare it against its competitors or industry average. Liquidity ratios include current ratio, quick ratio, and working capital.

Reporter stated the following: I work for Dish Network. I left the house an hour ago. The little boy was sitting in a dark room. I asked him was he in trouble and he said, “yes”. The stepdad told him not to say anything or he would hit him with a stick. The mom was just sitting there. The stepdad put the stick in this face but I did not see him hit him. I walked in the other room and to my left was a baby wrapped in multiple blankets. His hand was sticking out. I stared at the mom and she did not say anything. The mom took the baby out the blanket and it was alive. The mom put him in the other room and she wrapped the baby up again. When she told him to go to sleep. When I got ready to leave she wrapped the baby up again. He was crying and

Liquidity represents a company’s ability to pay its short-term obligations. In the following schedule is the calculation of the ratios that are indicators of the liquidity position of a company.

Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.

Liquidity ratios measure the short term ability of a company to pay its obligations and meet their needs for maintaining cash. According to Cagle, Campbell & Jones (2013), “A good assessment of a company’s liquidity is important because a decline in liquidity leads to a greater risk of bankruptcy” (p. 44). Creditors, investors and analysts alike are all interested in a company’s liquidity. After computing liquidity

Liquidity In analyzing liquidity of the company, the current ratio is not very telling of a falling company. The company increased its ratio throughout the period of the income statement thus building upon its company assets and allowing for a 6-1 ratio of assets over its liabilities. This implies the company is still able to operate sufficiently even though it did not make its optimum current ratio of about 8-1. However, when one takes the inventory out of the equation with the quick ratio, the numbers show the true strength of short term liquidity. The numbers are still good, and do not indicate failure – but are

The liquidity position of a company can be evaluated using several ratios which evaluate short-term assets and liabilities and a firm’s ability to settle short-term debts (Gibson, 2011). These ratios can provide insight into a firm’s ability to repay its debts in the short term (Gibson, 2011). In turn they suggest a firm’s capacity for debt-satisfying capabilities into the future (Gibson, 2011). This paper will use financial statement data as cited in Gibson (2011) from 3M Company (3M) to better understand liquidity measures to evaluate a firm’s total liquidity position. The following paper will focus on various liquidity calculations, their meaning, and their interpretation relative to 3M. Finally, an overall view of 3M’s liquidity

These ratios help company in determining its capability to pay short-term debts. Liquidity ratios inform about, how quickly a firm can obtain cash by liquidating its current assets in order to pay its liabilities. General liquidity ratios are: current ratio and quick ratio. Current ration can be obtain by dividing company’s current assets by its’ current liabilities. Generally a current ratio of two is considered as good (Cleverley et al., 2011). Quick ratio also known as acid test determines company’s liabilities that need to be fulfilled on urgent basis. Quick ratio can be obtained by dividing quick assets by current liabilities. Quick ratio is considered as stricter because it excludes inventories from current assets. Generally a quick ratio of 1:1 is considered as good for the company. Higher quick

The liquidity ratios are a group of ratios that show the relationship of a firm’s cash and other current assets to its current liabilities. This basically means that the ratios measure how well the company is able to pay its short-term obligations and how well they can confront unexpected needs for cash.